With an eye to claiming a share of Taiwan's NT$70 billion alcohol market after liberalization, many local food manufacturers are venturing into the alcohol business by entering partnerships with foreign manufacturers.
The Taiwan Tobacco & Wine Monopoly Bureau (TTWMB
According to Lin Tzann-Feng (
PHOTO: CHIANG YING-YING, TAIPEI TIMES
According to statistics compiled by the bureau, Taiwan's annual alcohol market is around NT$70 billion, with beer accounting for the largest share, at NT$25 billion. The bureau has a market share of NT$40 billion and imported alcohol has a share of NT$30 billion.
The large alcohol market has attracted many local food companies including Uni-President (
"The market for alcohol is so large that even if we get a small share, the amount of sales will still be very big," an official from a local food company said.
Since they are not allowed to manufacture alcohol yet, these companies have started to sell imported alcoholic beverages or have asked foreign manufacturers to brew alcohol under license for them. According to industry experts, these food companies are selling imported alcohol to better understand the market in preparation for manufacturing alcoholic beverages when the market is completely liberalized.
Uni-President has been the sales agent for Budweiser and Michelob, and Leo Beer is brewed by Philippine manufacturers for Uni-President under license. Nanlien International, under the Uni-President Group, has recently become the sales agent for the Japanese alcoholic soft drink manufacturer, Takara.
According to Nanlien, the company may set up a joint venture with Takara in the future, targeting Taiwan's market.
Hey Song has also asked foreign manufacturers to brew whisky, brandy and wine for the company on an Original Equipment Manufacturing basis (under license). Country House has been the sales agent for the Japanese whisky, Suntory.
The food industry's latest venture into the alcohol business is Kuang Chuan's foray into the whisky market. Kuang Chuan has just signed a contract with Glen Catrine Distiller, Alec Harvey & Associates, last week, becoming the sales agent for the British liquor maker. Kuang Chuan has been the sales agent for the Japanese beer Asahi since last year.
"Following the reduced tax on imported European whisky in the beginning of this year, there is a strong potential for Scottish whisky," said Wang Chun-chuan, chairman of Kuang Chuan.
The tax for European whisky went down from NT$440 to NT$198 per liter. Wang said that Kuang Chuan may set up a beer brewery in Taiwan when the market is completely liberalized.
John Mcdonough, Asian regional director of Glen Catrine Distillers, said that before signing the deal with Kuang Chuan, they spoke to several local food companies including Kin Car and Uni-President. According to Mcdonough, many local food companies have strong sales distribution channels, which is an advantage for them when entering Taiwan's alcohol market. In addition, several food companies own large convenience store chains. For instance, Kuang Chuan owns Hi-Life and Uni-President owns 7-Eleven.
The fact that many food manufacturers already have equipment for manufacturing beverages is another reason why food manufacturers are entering the field, according to industry sources.
After the alcohol market is completely liberalized and no longer under protection, the TTWMB is bound to face very fierce competition from the domestic manufacturers as well as foreign manufacturers. However, the bureau is confident about future competition.
"We will focus on producing products that cater to local tastes such as Kaoliang, Shaohsing, rice wine, and saki. That is our niche," Lin said.
According to Lin, the TTWMB may give up producing alcohol like whisky, which is not their specialty. The Bureau also plans to increase its budget for advertising to compete with other manufacturers. The bureau's recent beer advertisement, which cost the company only NT$46 million, has increased sales by NT$800 million, according to Lin.
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